Another option is that you can increase your canvas size slightly before pasting the picture. Then you can add the drop shadow after pasting. It gives you the same crisp corners without covering up any of your photo.

Hi,
I'm using Elements11 and have looked everywhere in the layer style options?stroke then inner-it's not there! It must be elsewhere but after 1/2 anhour, I gave up and accomplished 90% of the effect. I'm pleased and thank you. Diane

@Diane I use PSE 9 and the option for stroke in the layer styles only works as an outer stroke. Can you get the effect of what you want by just clicking on the thumbnail of the layer so that you get a selection outline of the object and then doing Edit>Stroke(Outline) Selection and then clicking on "Inside" for location and adjusting the size to however many pixels you want and the color to whatever you want? (That stroke can also be put on a separate layer from the object.)

I'm sure that Diane has found her answer by now, (well, it was 2 years ago), or is maybe even using a different program - but, in case anyone else has her problem about not knowing how to change to an inner stroke in PSE 11 - well, thanks to Susan Cantin, I found out to the answer to that about 5 minutes ago! If you're using the menus, it's Edit > Stroke (Outline) Selection - and a box opens with all the options.